If all it took were official cajoling, public shaming, technical assistance or corporate promises, factory jobs in Bangladesh and other developing countries wouldn’t be so deadly.
Their failure to make a difference unmistakably signals that disasters such as the building collapse last month near Dhaka that killed more than 1,100 people stem from systemic problems in global trade rather than the shortcomings of individual companies, industries and countries.
Some barriers to better work conditions in the developing world defy quick solutions. Limited skill requirements will keep wages in light industry relatively low. So will the abundant labor available. As a result, tougher responses — such as trade sanctions — would mainly harm the victimized workers themselves.
There is one action, however, that can at least ease pressure toward lower wages and margins, and create some genuine incentives for better pay and safer workplaces: re-establishing the quota system that once governed world apparel trade.
Import barriers such as those available under the Multifibre Arrangement seem unlikely candidates for helping garment workers. And a major aim of such trade management was to try to slow the decline of higher cost U.S. and European textile and apparel industries.
Yet developing countries clearly were the big winners during the MFA’s 1974-2005 lifespan. As garment production and employment plummeted in developed countries, the sector boomed in the developing world, largely thanks to exports. Production also dispersed geographically, enabling dozens of very poor economies outside East Asia’s early and rapid developers to start reaping industrialization’s benefits.
Success was owed largely to the agreement’s pragmatic, flexible provisions, combined with the mobility of apparel production. Importer governments retained great leeway in imposing quotas and could even waive them selectively. Moreover, garment tariffs stayed relatively high. Trade policy could be used to channel production toward and away from certain countries, serving a variety of national goals, including favoring former colonies, winning and supporting allies, and providing some protection for domestic industries.
Yet importing countries also pledged to increase quotas according to a specified schedule, which permitted continued growth in production and employment in poorer nations. Even better for the poorest, quotas on their own competitors among developing nations meant that they could create garment industries without excessive reliance on undercutting by the likes of China and India in terms of wages and regulatory safeguards.
Similarly, businesses didn’t have as much incentive to create margins by maximizing exploitation. In fact, the system could have been used to reward employer responsibility — though it seldom did.
U.S. trade data make clear the MFA’s benefits for developing countries. From 1989 (the earliest consistent figures readily available) until 1995, apparel imports rose almost 62 percent in nominal terms, to $39.44 billion from $24.35 billion. The established major low-income Asian exporters — especially China, India and Indonesia — more than doubled their U.S. sales. And Mexico’s exports more than quadrupled, thanks largely to the North America Free Trade Agreement. Similar preferences helped spur even faster growth in Central America and the Caribbean. The Middle East and sub-Saharan Africa registered sizable gains, too, and many smaller African countries entered the U.S. market for the first time.